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The world economy is in its worst state in four decades, says former US Treasury secretary.

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The former official accused the world central banks, the International Monetary Fund and the World Bank of inaction in the face of current economic challenges.

The world economy is currently facing the most complex set of challenges in four decades, declared Lawrence Summers, former Treasury Secretary of the United States, in a meeting held on 14 October by the Institute of International Finance in Washington, DC, reports The Washington Post.

Summers stated that two years of the pandemic, added to high inflation, the rise in grain prices and fuels caused by the conflict in Ukraine and Western sanctions, as well as the deterioration of relations between the US and China, represent “the most complex, disparate and intersectoral

” that he could remember in the last 40 years.

La economía de EE.UU. es

At the same time, the former official accused the central banks of the different countries of the world, to the International Monetary Fund and the World Bank, of inaction in the face of this reality, and said he was “very disappointed with the response”

of the regulators to the crisis. “Someone should come up with something substantial” to improve the situation, he stressed.

Governments around the world, in your opinion, should apply regulatory policies in three areas at the same time: would have to ensure that the financial markets function smoothly; increase the amount of loans and ease the debt burden of poor countries; and accelerate the transition to a low-carbon economy.

High inflation, which reached 8.2%, forced the US Federal Reserve System to increase the interest rate again, which led to the strengthening of the dollar and, in turn, caused a wave of interest rate hikes in other countries, which they hope will thus avoid the depreciation of their currencies against the dollar. Describing that economic situation, Summers argued that “it has all kinds of collateral consequences on the rest of the world

“, especially in the countries on process of development.

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